Corporate America's sales outlook is growing increasingly pessimistic as the U.S. trade war with China drives up prices, prompting customers to delay or scale back purchases and forcing the smallest businesses to consider closing their doors.
Some 20 percent of executives polled during the third quarter by the Business Roundtable, which represents the largest 200 American firms, predict sales will decline in the next six months, compared with just 9 percent in the spring.
“This quarter’s survey shows American businesses now have their foot poised above the brake, and they're tapping the brake periodically,” said Joshua Bolten, CEO of the Washington, D.C.-based organization. "Uncertainty is preventing the full potential of the economy from being unleashed, limiting growth and investment here in the U.S.”
The Roundtable's CEO Economic Outlook, based on a survey of executives’ plans for hiring, capital spending, and sales expectations over the next few months, offers a window into the assessments of some of the most influential U.S. companies. In the most recent questionnaires, just 61 percent of CEOs predicted revenue growth in the next half-year, down from 65 percent earlier.
Plans for capital spending on new factories and equipment also slowed, the survey showed. Just 36 percent of CEOs planned to invest more, down from 48 percent, while the number planning to trim investments spiked. About 20 percent said they planned to reduce their workforces over the next months, up from 16 percent.
Almost none of the leaders responded positively to a question on how changes in U.S. trade policy during the past year, which include large increases in duties on Chinese goods and threats to impose tariffs on items from French wines to products from India, had affected their companies.
More than half reported a somewhat or very negative impact on sales, with one third reporting a somewhat or very negative impact on hiring. There may be no immediate reprieve: Roundtable Chairman Jamie Dimon, the head of JPMorgan Chase, said he's skeptical that a trade deal can be reached in 2020, just three months away.
Not only will the U.S. presidential campaigns be gaining momentum, with Democrats choosing a candidate they hope can unseat President Trump, lawmakers in both the House and Senate will be focused on their own races and reluctant to irk voters for the sake of political agreement.
“The U.S. needs strong, sustained long term economic growth in order to remain globally competitive and expand opportunity for more Americans. Business Roundtable CEOs stand ready to work with policymakers to address our nation’s biggest challenges to create conditions for inclusive growth, investment and job creation here in America.”